A seismic shift in the costs associated with renting vs buying
In recent years, the consensus of opinion has been that buying a home can often prove cheaper than renting. However, like many things, the pandemic appears to have altered this trend. Despite rents in Great Britain seeing a 7.1% rise over the last 12 months, strong house price growth fuelled by the stamp duty holiday coupled with increases in higher loan-to-value mortgage rates are suggested to have resulted in a big turnaround.
Research from Hamptons outlined that renting is now cheaper than buying a home. This illustrated that people buying with a 10% deposit would have been better off than renters by £102 a month before the pandemic began in March 2020. However, last month, data showed that the average private sector tenant was better off, spending £71 a month less in rent.
There are now said to be only four areas in the UK where it is cheaper to buy than rent. The regions being the North East, North West, Yorkshire and Humber, and Scotland. This is in contrast to May last year, when rental demand dropped as younger adults returned to live with their families during the pandemic and work and leisure restrictions made city living less attractive. In early 2020, it was cheaper to buy instead of renting in every nation or region in the UK.
This represents a seismic shift and really does highlight the continued importance of the private rented sector. Although, as always, potential buyers will need to take into account a host of financial and practical factors when deciding to rent rather than buy, or vice versa, which may or may not have been captured in this particular research. What this data also demonstrates is the value attached to the advice process for both homebuyers and landlords. And this value will only continue to grow over the course of 2021 and beyond.